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The US dollar continues to crash lower against the Japanese yen currency as the greenback accelerates its downside against all major currency pairs as the Fed looks to pull back on rate hikes.
As the USDJPY pair continues to fall traders are not looking towards central bank guidance from the Federal Reserve, especially as we approach the Federal Reserve December rate decision.
Last week we saw the USDJPY pair crash below its 200-day moving average, marking a new bear trend. Far more interestingly, the US dollar index also moved below its 200-day moving average.
With the USDJPY pair under its 200-day moving average it is tough road back. I believe we could easily start to see the USDJPY pair to start to decline towards the 130.00 support zone.
The key thing to watch this week is that the trend remains long-term bearish. With the new trend flip it could be said that shorting rallies in the USDJPY pair is the preferred way forward.
According to the ActivTrader Market Sentiment tool, 56% of traders are bearish towards the USDJPY pair, which strongly hints that we could see some recovery.
With retail traders or participants on the side of selling the chances are increasingly strong a rebound could happen, however, this does not match with the technical picture.
USDJPY Short-Term Technical Analysis
Technical analysis on the four-hour time frame shows that the USDJPY pair has nearly reached the final targets of two head and shoulder pattern after reaching the 134.00 level.
According to the overall size of the large bearish pattern we could likely see more losses ahead towards the 132.00 level, which means the downside is not yet done.
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USDJPY Medium-Term Technical Analysis
The daily time frame is showing that the USDJPY pair has formed a large a large head and shoulders style pattern. These are amongst the most reliable bearish reversal patterns, and it has been invalidated.
According to the size of the price pattern we are likely going to see some type of huge drop soon. I will also state that move under the 136.00 level would be hugely bearish.
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